New Chairman for Hynix Semiconductor

SK Group Chairman Chey named to double as chairman of the group's new affiliate

"I will do my best to make Hynix a great success," proclaimed Chairman Chey Tae-won in his inaugural speech as new chair-man of Hynix Semiconductor Co., which his business group took over recently, and following his selection as the top executive by the chipmaker's board on Feb. 14.
At the Seoul office of the chip company, Chey quipped, "Its my first day in office," adding that he will go around on foot at the forefront of management of the chip company to stress the importance of Hynix's success to SK Group and to the nation.
President Ha Sung-min of SK Telecom, which directly took over the chipmaker, was named chairman of the board of directors of SK Group's brand new affiliate. SK Telecom paid 3.374 trillion won to take over 21 percent of the chipmaker. SK Telecom also bought the chipmaker's new shares for 2.342 trillion won, which will go to Hynix's 4.2 trillion won earmarked for investments in chip production facilities this year.
New Hynix Chairman Chey emphasized that the company should produce high value-added chips and he will spare no efforts to secure enough funds for investments in Hynix to normalize its operation. He said he will take the Hynix board's decision to name him as the new chairman as a signal to lead the company to be one of the best chipmakers globally.
Chey said he will fall back on his experience of running SK Group and his own global business network to spur Hynix's operation, as it is a national company making a huge contribution to the nation's economic well being, taking charge of a key national industrial project.
Hynix is set to invest 4.2 trillion won in NAND flash memory production facilities and away from D-RAM chips in order to be line with chip market trends that shows demand building up for the NAND chips in line with the projected growth of mobile equipment.
Hynix wanted to expand its NAND flash memory chip production to catch up with its D-RAM production, with the second largest market share, but it did not have enough funds until now.
The new chairman told the board that they should watch his steps from now and he will see that enough funds are invested in Hynix in the near future.
In the meantime, S&P upgraded the credit rating for Hynix one step up from 'B+' to 'BB-,' while SK Telecom's rating fell a notch from 'A' to 'A-.'
SK Telecom's 21 percent stake takeover has not been easy. The market reacted harshly when SK Telecom announced its intention to take over a large stake in the chipmaker last July. S&P said it would have to downgrade its credit rating if the telecom company took over a stake in Hynix, resulting in a drop in the share price of SK Telecom to the 130,000 won per share level for the first time in 10 years.
When Chairman Chey was charged with the formation of a secret fund in November last year, rumors said SK Telecom might give up its attempt to take over the chipmaker. Some board members rejected the proposal to select Chey as chairman due to his involvement in the alleged secret fund scandal.
But Chey continued to pursue the plan to take control of Hynix despite the problems he and his group faced. He will take the voices of opposition to the takeover as a sign of encouragement to do well in running the chipmaker.
SK Group became a global conglomerate through two huge M&As; the first was the takeover of an oil refinery, SK Innovation, in 1980, and the other was the takeover of SK Telecom in 1993, which made the group the fourth largest in terms of assets in Korea.
Hynix was put on the M&A market in the mid-2000s, as SK Group, with its affiliates dependent on domestic market, had to look overseas for expansion for further growth as the domestic market was depressed and strict government regulations on domestic businesses allowed no room for further expansion for the group. Hynix receives about 90 percent of its sales from overseas, which suited SK Group's plan to expand overseas to diversify its market. nw

New Chairman Chey Tae-won for Hynix Semiconductor Co. points his finger while inspecting a Hynix plant as the new chairman of the chipmaker on Feb. 14. He also heads SK Group as chairman.